Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: NucTrader who wrote (342573)	9/3/2007 7:31:06 PM
From: stan_hughes	Read Replies (2) \| Respond to of 436258

Hey, it's a big country, and obviously I'm speaking in generalities. As I understand the Texas situation, your astronomical property tax rates have had a tendency to dampen the upside, therefore you might not see as much of a downside for lack of a big need to wring out any speculators. Same thing probably applies to burgs like Hole-in-the-Wall, Idaho and a lot of other locations too, although not necessarily because of property taxes. No doubt that in a lot of towns, RE never really went crazy in the first place -- it seems to have been largely been a coastal disease, but I also think it had a lot to do with areas that already had a significant pre-existing presence of organized crime to work the system (I'll leave that discussion to another post). Having said that, the sheer huge nominal value of RE in the bubble markets that did occur and the amount of mortgage money on the table with it is enormous -- enormous enough that at current default ratios it can (and IMO will) bring down a major given enough concentration to the defaults -- and that's aside from the derivative exposure for anybody that went the extra mile and overly juiced their returns by additional leveraging in the CDO market, and then maybe juiced things again e.g. by writing swaps. At an estimated $400-500 trillion, the theoretical notional exposure of all derivatives exceeds the capital of the whole enchilada = a lot of supposed receivables from supposedly worthy institutions could be worth NADA = major systemic bank failures are possible + this isn't supposed to have been possible = not good. All of what I have laid out can be true at the same time that all of what you describe is also true -- bubble and non-bubble situations within the same nation can co-exist at the same time -- but in the end, even the non-bubble areas will feel the pain of the bubble collapse, if only because the losses to the banks will have to be absorbed federally where they will then get spread around in the form of taxes. And even if there was no real estate bubble to speak of where you live, the impact of a bubble-bursting national recession could very well result in a future decline in your local home prices no matter where you live